On April 20, 2010, the Deepwater Horizon oil rig exploded in the Gulf of Mexico off the Louisiana coast, leading to the largest oil spill in U.S. history.  Hundreds of lawsuits were filed in the wake of the spill, brought by over 100,000 individual claimants on behalf of themselves and scores of putative class members.  Those lawsuits were consolidated into multi-district litigation (“MDL”) in the Eastern District of Louisiana in New Orleans, and, as presiding Judge Carl Barbier as described it, the MDL “is no ordinary case.”  Indeed, the MDL already has resulted in some interesting procedural creations and rulings on substantive law. 

Procedural Rulings

In August 2010, immediately after the MDL commenced, the court created a free website for the public where the court posts all of its rulings, minute entries, and a calendar for the MDL.  See http://www.laed.uscourts.gov/OilSpill/OilSpill.htm. The website contains a useful chronological listing of happenings in the litigation, as well as links to full-length copies of the court’s orders, which, without such a website, would only be available for a fee through the password-protected PACER system.

The court also created what it calls “pleading bundles,” grouping plaintiffs with similar claims together and ordering them to file “master complaints,” in response to which the defendants can more efficiently file answers and/or motions to dismiss.  The court further ordered both plaintiffs and defendants to create Steering Committees to coordinate and organize discovery.  This organizational structure has kept discovery moving rapidly, with nearly 200 depositions taken within the last six months.

Two weeks ago, the court set a trial date of February 27, 2012 for the “Limitation Trial.”  In the Limitation Trial, the court will decide whether Transocean, as owner of the Deepwater Horizon rig, is entitled to protection under the Limitation of Liability Act of 1851.  Under that Act, a vessel owner is liable only for the post-accident value of the vessel and its cargo, so long as the owner can show it had no knowledge of the negligence that led to the accident.  Transocean asserts that the post-accident value of the Deepwater Horizon is just under $27 million.  Before the explosion, the Deepwater Horizon rig was valued at around $650 million. 

The Limitation Trial consolidates all maritime claims against Transocean into a single trial to the bench.  The trial will occur in three phases and will decide issues of liability as to defendants other than Transocean.  It will not, however, reach Clean Water Act claims, individual damages claims, or any class action issues. 

The first phase of the trial will begin on February 27 and will focus on events leading up to and including the explosion in April 2010.  The second phase will focus on source control and oil discharge quantification.  The third phase will address remaining liability issues, including dispersants and cleanup.

Recent Substantive Rulings

The MDL court has issued a number of substantive rulings in recent months that will affect the scope of the Limitation Trial and the proceedings that will follow it. 

On June 16, 2011, the court dismissed claims for injunctive relief under the Clean Water Act, CERCLA, the Endangered Species Act, and the Emergency Planning and Community Right-to-Know Act of 1986.  Granting a motion to dismiss filed by BP, the court held that the plaintiffs lacked standing to obtain an order to prevent BP from violating the various environmental statutes.  Specifically, the court held that these plaintiffs had no “injury in fact” given that BP already was cleaning up the oil spill, and plaintiffs did not assert any deficiency in the federal and state remediation efforts.

On July 15, 2011, the court dismissed RICO claims filed against BP.  The plaintiffs alleged that BP engaged in a pattern of organized activity meant to defraud federal and state regulators, and that such fraud ultimately led to the explosion of the Deepwater Horizon oil rig and the plaintiffs’ alleged resulting damages.  The court held that this alleged fraud, however, was too attenuated to plaintiffs’ alleged injuries to support a RICO claim.

On August 26, 2011, the court issued a lengthy order, granting in part and denying in part, a motion to dismiss the “pleading bundle” made up of plaintiffs who claim to have suffered purely economic losses.  That is, they do not assert any personal injury or property damage claims, but instead seek remuneration for alleged business interruption and lost profits claims.  The defendants moved to dismiss this bundle of purely economic claims on various grounds.  Ultimately, the court:

  • dismissed the plaintiffs’ state law claims (e.g., nuisance, trespass, fraudulent concealment), holding that federal law pre-empts state law where the spill happened outside any state’s territorial waters;
  • limited plaintiffs’ ability to proceed on federal common law maritime claims to those who have alleged physical injury to their property or other proprietary interest or if they are commercial fisherman;
  • allowed plaintiffs to proceed under the Oil Pollution Act regardless of physical injuries but only if they comply with the Act’s presentment requirements (i.e., first making a claim with BP’s extra-judicial claims processor);
  • allowed plaintiffs with federal common law maritime claims to pursue punitive damages;
  • allowed plaintiffs who have claims for economic losses as a result of the drilling and permitting moratorium put in place by the government after the spill to proceed past the dismissal stage but noting that the court will, at a later date, define the causal link required to succeed on such a claim;
  • dismissed plaintiffs’ claims for a declaratory judgment about certain settlement terms; and
  • dismissed plaintiffs’ claims for attorneys’ fees under general maritime law.

Additional rulings from the court can be expected ahead of the Limitations Trial scheduled to begin in February.  Stay tuned.